Shares of leading semiconductor manufacturer Intel Corp. (INTC) are in a dive, having fallen nearly 20% since reaching an 18-year high close on June 1. Moreover, its 50-day moving average has dipped below its 200-day moving average, a so-called "death cross" that usually signals further declines ahead to chart-reading technical analysts, according to data from FactSet Research Systems, MarketWatch reports. Meanwhile, fundamental analysts have their own reasons for pessimism, per the same article, based on reports that Intel is suffering production problems and delays that are leaving it unable to keep up with demand.
Intel's Steep Decline
|Stock||Move Since June 1|
|iShares PHLX Semiconductor ETF (SOXX)||(3.1%)|
Source: Yahoo Finance; computed based on adjusted closing data from June 1 through Sept. 13.
Based on adjusted closing price data, not only did Intel stock reach an 18-year high on June 1, but it also had rocketed upward by 75% in less than a year, since July 3, 2017. A key driver of recent bearish sentiment among investors has been a report that Intel's production of 14-nanometer (14 nm) chips is falling short of demand by as much as 50%, MarketWatch says. In semiconductor jargon, the lower the nm number, the more tightly packed the transistors are in a processor, thus increasing the speed and energy efficiency of that processor, while reducing the amount of waste heat generated, as explained on Quora.com. (For more, see also: Intel a 'Top Pick' Despite Poor Sentiment: Citi.)
Intel, however, disputes the reports of supply shortfalls. "We will have supply to meet our announced, full-year revenue outlook and we're working closely with our customers and factories to manage any additional upside," Intel told MarketWatch, in an emailed statement. Nonetheless, back in April the company acknowledged production problems, according to The Wall Street Journal.
Scandal and Slippage
Another factor weighing on Intel has been the forced resignation of CEO Brian Krzanich in June, pursuant to revelations that he had violated company policy by having an affair with a fellow employee. However, his reputation already had become tarnished by repeatedly missing delivery deadlines for new products, the Journal reports. In particular, the company's target for wide availability of the next generation of its chips, the 10 nm variety, has slipped from the second half of 2017 to sometime in 2019. (For more, see also: Intel's 'Biggest Risk' Remains Unresolved.)
Intel is Lagging Badly
|Stock or Index||YTD Gain|
|Advanced Micro Devices Inc. (AMD)||196.5%|
|SOXX Semiconductor ETF||9.6%|
|S&P 500 Index (SPX)||8.6%|
Source: Yahoo Finance; computed based on adjusted closing data through Sept. 13.
Shares of AMD have nearly tripled in price YTD, despite a 5.4% slide on Sept. 13. In the absence of company-specific negative news, the decline has been attributed to profit-taking by investors, CNBC indicates.
Rivals Forge Ahead
Among the rival semiconductor manufacturers that are stealing a march on Intel is Advanced Micro Devices, the Journal adds. Indeed, some analysts believe that AMD is coming close to competitive parity with Intel, and perhaps an outright advantage, per another MarketWatch article. In particular, AMD is on track to release 7 nm chips in 2019 that are increasingly being viewed as superior to Intel's delayed 10 nm product. Meanwhile, various analysts cited by MarketWatch expect that Intel's 10 nm chip will encounter yet more delays, pushing widespread availability into 2020.